Correlation Between Dodge Cox and Vanguard Mid-cap
Can any of the company-specific risk be diversified away by investing in both Dodge Cox and Vanguard Mid-cap at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Dodge Cox and Vanguard Mid-cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dodge Cox Stock and Vanguard Mid Cap Index, you can compare the effects of market volatilities on Dodge Cox and Vanguard Mid-cap and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Dodge Cox with a short position of Vanguard Mid-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and Vanguard Mid-cap.
Diversification Opportunities for Dodge Cox and Vanguard Mid-cap
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dodge and Vanguard is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Cox Stock and Vanguard Mid Cap Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Mid Cap and Dodge Cox is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Dodge Cox Stock are associated (or correlated) with Vanguard Mid-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Mid Cap has no effect on the direction of Dodge Cox i.e., Dodge Cox and Vanguard Mid-cap go up and down completely randomly.
Pair Corralation between Dodge Cox and Vanguard Mid-cap
Assuming the 90 days horizon Dodge Cox Stock is expected to generate 0.88 times more return on investment than Vanguard Mid-cap. However, Dodge Cox Stock is 1.13 times less risky than Vanguard Mid-cap. It trades about 0.12 of its potential returns per unit of risk. Vanguard Mid Cap Index is currently generating about 0.11 per unit of risk. If you would invest 20,974 in Dodge Cox Stock on September 4, 2024 and sell it today you would earn a total of 7,831 from holding Dodge Cox Stock or generate 37.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dodge Cox Stock vs. Vanguard Mid Cap Index
Performance |
| Timeline |
| Dodge Cox Stock |
| Vanguard Mid Cap |
Dodge Cox and Vanguard Mid-cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dodge Cox and Vanguard Mid-cap
The main advantage of trading using opposite Dodge Cox and Vanguard Mid-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Cox position performs unexpectedly, Vanguard Mid-cap can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Vanguard Mid-cap will offset losses from the drop in Vanguard Mid-cap's long position.| Dodge Cox vs. T Rowe Price | Dodge Cox vs. T Rowe Price | Dodge Cox vs. T Rowe Price | Dodge Cox vs. T Rowe Price |
| Vanguard Mid-cap vs. Global Gold Fund | Vanguard Mid-cap vs. Vy Goldman Sachs | Vanguard Mid-cap vs. James Balanced Golden | Vanguard Mid-cap vs. International Investors Gold |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |